PATENT PROTECTION FOR
IN CANADA - CHRONOLOGY OF SIGNIFICANT EVENTS
Law and Government Division
30 March 2000
PATENT PROTECTION FOR
IN CANADA - CHRONOLOGY OF SIGNIFICANT EVENTS
1923 -- The Patent Act was amended
to provide for compulsory licensing for manufacturing purposes for food and drug patents.
In relation to patented medicines, the amendment allowed a compulsory licence to be
granted if a medicines active ingredients were manufactured in Canada. (A compulsory
licence is a statutory licence that gives the licensee the right to manufacture, use, or
sell a patented invention before the patent expires. Licences could be granted without the
consent of the patent holder and the licensee was required to pay a royalty.)
1969 -- The Patent Act was amended
to permit compulsory licences to import medicines into Canada. This allowed generic drug
producers to import a medicine's active ingredients and process them into final form for
sale. The Commissioner of Patents was authorized to issue compulsory licences to import
and to fix a royalty for them. Royalty rates were set at 4% of the net selling price of a
drug in its final dosage form.
1983 -- The federal Minister of Consumer
and Corporate Affairs called for a rebalancing of the 1969 policy on compulsory licensing
in order to generate growth in the pharmaceutical industry.
1984 -- The federal government established
the Commission of Inquiry on the Pharmaceutical Industry (Eastman Commission), part of
whose mandate was to make recommendations on patent protection for the pharmaceutical
1985 -- The Commission of Inquiry on the
Pharmaceutical Industry recommended that an owner of a patent for a medicine be granted a
short period of exclusivity (four years) from the date when a new drug received a Notice
of Compliance (NOC)(1) authorizing marketing. The
Commission also recommended that royalties paid under compulsory licences should be put
into a special royalty fund. The royalty rate would be determined in accordance with a
formula that took into account the value of a licensees sales of compulsorily
licensed products in Canada, the pharmaceutical industrys world-wide ratio of
research and development to sales, plus 4%. Distributions from the fund to firms whose
patents were under compulsory licence were to be based on the relative research intensity
of the patent-holding firms.
1987 -- Bill C-22, which amended the Patent
Act, made significant changes to the compulsory licensing system for patented
medicines. The amendments guaranteed patent owners a period of protection from compulsory
licences. A brand-name drug manufacturer receiving an NOC for a drug after 27 June 1986
was guaranteed 10 years of protection against compulsory licences to import and seven
years protection against compulsory licences to manufacture. Patented medicines for
which NOCs had been issued on or before 27 June 1986, and for which generic drug producers
had obtained either an NOC or a compulsory licence to import, but not both, were entitled
to seven years protection against compulsory licences to import. Similarly,
medicines for which an NOC had been issued on or before 27 June 1986, but for which
neither a compulsory licence nor a generic NOC had been issued, had eight years of
protection against compulsory licences to import.
Additional protection was granted to drugs
invented and developed in Canada; compulsory licenses to import were not available, but
compulsory licences to manufacture could be issued if, within the seven years after the
NOC for the drug had been issued, the inventor failed to make the drug in Canada for the
purpose of completely or substantially supplying the Canadian market.
Bill C-22 also changed the general patent
law to provide that the term of a patent would be 20 years from the date on which a patent
application was filed, rather than 17 years from the date the patent was issued. This
change became effective in 1989.
1991 -- The then Director-General of the
General Agreement on Tariffs and Trade, Arthur Dunkel, compiled a Draft Final Act for the
conclusion of the Uruguay Round of the GATT multilateral trade negotiations, which also
contained a text of the draft Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS). Article 31 of the TRIPS agreement contained provisions on "Use
Without the Authorization of the Right Holder." It was generally accepted that the
Canadian compulsory licensing regime for pharmaceutical products in existence at this time
was incompatible with Article 31. (The text of the TRIPS Agreement as contained in the
so-called Dunkel text was informally agreed to by all parties to the GATT negotiations and
became part of the Agreement finally adopted in 1994.)
1992 -- The federal government endorsed
the Dunkel text. The text of the North American Free Trade Agreement (NAFTA) was
finalized, with Chapter 17 largely based on, and in many instances identical to, the
provisions of the then draft TRIPS Agreement. Article 31 of the TRIPS Agreement was
reproduced almost identically in Article 1709(10) of NAFTA.
1992 -- The federal government moved to
further modify the Patent Act and to implement the TRIPS and NAFTA provisions on
intellectual property by introducing Bill C-91, the Patent Act Amendment Act, 1992, in the
House of Commons. The bill eliminated compulsory licences for pharmaceutical products
though compulsory licences in existence before 20 December 1991 continued in effect,
subject to the seven and ten-year limitations established in Bill C-22. Compulsory
licences granted after 20 December 1991 but before the day the Act came into force were
terminated when the Act became effective.
Bill C-91 also created two exceptions to
an action for patent infringement (the rule that anyone who, without the consent of the
patent owner, makes, uses or sells a product where a patent is in force is liable for
patent infringement). Both exceptions permit persons to use a patented product for certain
purposes before the patent expires. The first exception, known as the "early
working" exception, allows a person to use a patented invention while the relevant
patents are in force only for obtaining regulatory approval to sell an equivalent product
after the patents have expired (section 55.2(1)). Under this provision, a generic drug
manufacturer could develop a generic version of a medicine and take whatever steps were
necessary to meet the regulatory requirements pertaining to its sale before the expiry of
the relevant patents. The second exception ("stockpiling" exception) allows a
person to use a patented invention for a period of time before the patent expires in order
to manufacture and store a product intended for sale after the expiry of the patent
Bill C-91 also provided for product
patents for pharmaceutical inventions. Prior to the bill such inventions were only
patentable as process patents (or so-called "product-by-process patents").
February 1993 -- The Patent Act
Amendment Act, 1992 became law.
March 1993 -- The Patented Medicines
(Notice of Compliance) Regulations (Linkage Regulations) detail how the granting of an
NOC for a generic drug will be linked to the expiry of patents for the brand-name
equivalent drug. Essentially, these regulations provide that, unless a patentee consents
to the making of the generic drug, the relevant patents are invalid, or there is no
infringement of any patent rights, the Minister of Health cannot issue an NOC to a generic
manufacturer until the relevant patents expire.
The Manufacturing and Storage of
Patented Medicines Regulations provide that a generic manufacturer can stockpile a
generic version of a drug six months before the relevant patents are due to expire.
April 1997 -- The House of Commons
Standing Committee on Industry issued a report on the Patent Act Amendment Act, 1992 recommending
that the government re-visit the regulatory regime associated with Bill C-91.
December 1997 -- The European Union (EU)
requested that Canada hold consultations under the WTO dispute settlement procedures in
relation to the protection of pharmaceutical inventions under the Canadian Patent Act
and Canadas obligations under the TRIPS Agreement.
March 1998 -- Amendments to the Patented
Medicines (Notice of Compliance) Regulations came into effect. Although the amendments
made a number of changes to the operation of the Linkage Regulations, they did not change
the overall regime governing patent infringement, early working or stockpiling.
February 1999 -- The Dispute Settlement
Body under the WTO established a Panel to hear the European Unions challenge under
the TRIPS Agreement in respect of the early working exception (section 55.2(1)) and the
stockpiling exception (section 55.2(2)) of the Patent Act.
The EU argued that Patent Act and
the regulations that provide for the manufacturing and stockpiling of pharmaceutical
products without the consent of the patent holder for a period of six months prior to the
expiration of the 20-year patent term (section 55.2(2)) violate Canadas
obligations under the TRIPS Agreement (Article 28.1 and Article 33).
Moreover, the EU maintained that by
treating patent holders in the field of pharmaceutical inventions less favourably than
patent holders of inventions in all other fields of technology, Canada had violated its
obligations under Article 27.1 of the TRIPS agreement. This requires patents to be
available and patent rights to be enjoyable without discrimination as to the field of
The EU further contended that the
provisions of Article 28.1 of the TRIPS Agreement are violated by the provisions of the Patent
Act (section 55.2(1)), whereby a third party may, without the consent of the patent
holder, use a patented invention while the patent remains in force in order to obtain
regulatory approval for the sale of an equivalent product after the patent has expired.
Canada, on the other hand, argued that
that section 55.2(1) and 55.2(2) of the Patent Act did conform with Canadas
obligations under the TRIPS Agreement, because:
each of these provisions is a
"limited exception" to the exclusive rights conferred by a patent within the
meaning of Article 30 of the TRIPS Agreement; and
these provisions neither discriminate as
to the field of technology in which any relevant invention occurs nor reduce the minimum
term of patent protection.
March 2000 -- The WTO Panel agreed with
Canada on the early working exception in section 55.2(1) of the Patent Act,
holding that it was not inconsistent with Canadas obligations under the TRIPS
agreement; however, the Panel sided with the EU with respect to the stockpiling exception
in section 55.2(2) and concluded that this was inconsistent with Canada's TRIPS
April 2000 -- Canada announced that it would implement the WTO
Panels finding that Canadas stockpiling exception is not consistent with
Canadas TRIPS obligations.
May 2000 -- Ruling in favour of the United States, a WTO Panel
concluded that Canadas term of patent protection for patent applications filed
before 1 October 1989 (17 years from the granting of the patent) did not meet the minimum
term of patent protection established under TRIPS. The Panel found that TRIPS requires a
minimum term of 20 years from the date a patent application is filed.
Bill C-22 created two patent term provisions: 17 years from the granting
of the patent for applications filed before 1 October 1989 ("old regime") and 20
years from the filing of the application for applications filed on or after 1
October 1989 ("new regime").
The United States claimed that TRIPS required a minimum 20-year term
from the date of filing for all patents. The dispute concerned patents
granted under the old regime within three years from the date that the applications for
them had been filed.
Canada announced that it would appeal the WTO Panel decision.
(1) A Notice of Compliance is the name given to the document
issued by the federal Department of Health that formally authorizes the sale of drug after
it has met the requisite safety and efficacy standards.